Toronto Estate Law Blog : Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In the October 22, 2007 edition of the "Law Times", Bev Cline writes about the importance of family dynamics when considering an estate plan, and when dealing with estate disputes. 

The article quotes Hull and Hull's own Jordan Atin: "A will is usually the last thing that a parent says to his or her children...". As such, the document "creates a definitive, lasting record of the relationship between parent and child and among a child and his or her siblings. That reason alone explains why estate disputes are so hotly contested".

Jordan Atin states that in addition to addressing the mechanics of the estate plan, solicitors also need to address their client’s family dynamics. Lawyers should consider with their clients the emotional effects of the will may that arise after the testator passes away. 

In the article, Sender Tator, a solicitor with Schnurr Kirsh Stephens, notes that in the context of litigation, “emotion often gets in the way of legal or practical realities; your client is often looking for a certain result, which legally may not be feasible".

The interplay of family dynamics and human emotion is one factor that makes estate litigation so interesting. (It is also a factor that often makes the practice so frustrating!)

One of the functions of a solicitor in estate litigation is to consider the role of family dynamics, and to see that it is identified and addressed. In addition, the solicitor should strive to ensure that the legal or practical realities are not overlooked, and that passion alone does not drive the litigation.

Thanks for reading, and happy Halloween.

Paul Trudelle

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Yesterday, I blogged on the case of Gubo Estate v. Cotroneo. There, the estate was granted judgment against the Defendant for the recovery of an alleged “gift” that the court determined was unsubstantiated, and therefore repayable.

Interestingly, the judgment was not for the full amount of the gift. The Defendant alleged that he had paid out approximately $22,500 on behalf of the deceased, and that this amounted to a debt in his favour. The Court accepted this, without much discussion, and reduced the amount repayable to the Estate by $22,500.

The Court heard from the Defendant that the deceased had made a gift of the funds to him, and that the Defendant had made various expenditures on behalf of the deceased. The Court did not accept that the transfer from the deceased to the Defendant was a gift. However, the flip side of this was that the expenditures by the Defendant for the deceased were not gifts, either: hence, the reduction of the judgment in favour of the Estate.

In dealing with the case of an alleged gift, counsel should always consider the bigger picture: if the gift fails, is there a basis for a counterclaim by the defendant for advances from the defendant to the deceased, or on the basis of quantum meruit?

Thank you for reading,

Paul Trudelle

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In the recent case of Gubo Estate v. Cotroneo, the Court considered a claim on behalf of an estate for the recovery of funds advanced by the deceased to her boyfriend.

The deceased had sold her home and had given the proceeds of sale, being $65,000, to her boyfriend, and then moved into his home.

The Court found that there was insufficient evidence to establish that the advance was a gift. 

As to a remedy, the Court heard evidence that the advance was likely for the purpose of defeating creditors of the deceased. As such, the Court declined to apply the doctrine of resulting trusts, applying a Court of Appeal statement to the effect that "evidence of an illegal scheme will not be received to support a resulting trust."

However, the Court found that it was not necessary to rely on the doctrine of resulting trusts. The Court found that it was able to make a monetary award, and granted judgment in favour of the deceased’s estate.

In advancing a claim on behalf of an estate, the imposition of a trust is not always necessary, and a monetary award will often be the most appropriate remedy.

Have a great day,

Paul Trudelle

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Further to my blog Wednesday about the tragic situations that can be caused by mental illness and disability and Thursday about the unpredictability of Estate litigation, the Chris Benoit murder-suicide tragedy has elements of both.

Benoit apparently murdered his wife, then his son, then killed himself.  Depending on the truth of those allegations and verification of timing, very different consequences prevail in terms of the division of Benoit’s property and that of his wife. 

Neither parent left a Will, but Benoit did leave children living in Canada from a prior marriage, and his wife was survived by her mother.  I recall from early news reports considerable speculation about the little boy having had a developmental delay due to a genetic disorder, but that aspect seems to have been set aside by the media.

If the child was killed first, then, at least as reported, under Georgia law the mother apparently would inherit Benoit’s estate.  Apparently some of her estate (though perhaps not all) would in then in turn be inherited by her mother, or so her lawyers were arguing.

If the mother died first, then Benoit’s children from the prior marriage would be the beneficiaries. 

In cases as tragic as this one, the monetary ramifications can seem awfully unimportant to the reader, but not, I suppose, to those left behind. 

Thanks for reading, sad though some of my blogs this week may have been.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In yesterday’s blog, I alluded to the surprise many Estate Trustees, Attorneys for Property and Guardians for Property express when notified of their duties to account. Often, the surprise is mixed with indignation that someone is putting them to that test, and even unwillingness to comply.

There are, however, benefits to passing accounts. The following is a list, by no means exhaustive, of some of those benefits:

1.         Unless there has been failure to disclose crucial information or outright fraud, a Judgment passing accounts constitutes almost complete protection from future complaints about the administration during the period of the accounting.

2.         Releases from beneficiaries are cheaper and simpler protection than a passing of accounts, but they leave open risks that a beneficiary may claim not to have understood the Release, or was forced to sign it, or “never really read it”, or did not obtain independent legal advice, and so on.

3.         Attorneys, Guardians and Estate Trustees will often be precluded from paying themselves compensation until their accounts are passed (or the beneficiaries consent).

4.         A passing of accounts allows the Estate Trustee to know what complaints or concerns beneficiaries may have. There is a risk, I suppose, of waking a sleeping dog by passing accounts. However, I find that in many cases the sleeping dog will wake up anyway: best to know the problems early on in the administration while complaints can be addressed and accomodated, instead of later on, when it may be too late.

Thanks for reading.

Sean Graham

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Inter Vivos and Principal Residence Trusts

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about Inter Vivos and Principal Residence Trusts as effective tools to consider when tax planning a will.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Court Order Compliance

This week on Hull on Estates, Sean Graham and Justin deVries talk about court order compliance, contempt and enforcement of court orders in general.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Estate/Capacity litigators tend to come into situations after the administration has become contentious. I am often struck by fiduciaries’ lack of knowledge, at the outset, of the extent of their duties to keep records and documentation of their administration, and the troubles this can cause.

Rule 74.17 of Ontario’s Rules of Civil Procedure provides a very clear description of the form of Estate Trustees’ accounts, and Attorneys for Property or Guardians of the Property of incapable persons must account in an analogous fashion.

When asked to place these duties into context, I often use blunt language such as “You have to be able to provide the value of all the assets before you took control over them, every penny or asset paid to you, every penny or asset you pay out, how you invest the money in the meantime, and why you do it. Once you provide all that information, you then need to justify every payment and provide proof of the transaction.”

No doubt the vast majority of fiduciaries are told the same thing in writing by their solicitors. Nevertheless, it seems to me that in the desire to gather in the assets, and perhaps more to the point to pay it out, there is a natural tendency to neglect to keep records and protect oneself for many fiduciaries. In those cases, attempting to collect the information and documents after the fact can be a monumental proposition. 

A fiduciary spending time on record-keeping at the outset and in an ongoing basis is protecting against what could be a terrible ordeal later on, and is unlikely to regret doing so.

Thanks for reading.

Sean Graham

• Email This
• Print
• Comments
• Trackbacks
• Share Link

A question was recently posed to Ken Gallinger, an ethics columnist with the Toronto Star: was one of two brothers who received his father's estate ethically obliged to share his entitlement with his disinherited brother?  The questioner stated that he was shocked that his father chose to make such a distribution when there was no indication that the father intended to treat his sons other than equally in his Will.  The advice of Gallinger was along the lines of: no, you are under no obligation to share the bequest...but... you would probably feel better if you did.

Estate litigation is one of the few areas of law where you could conceivably see the same question posed to an advice columnist as to a lawyer.  Reading the exchange between the questioner and Gallinger gave me pause to consider what my answer would be and, more to the point, to consider that I had yet to be asked that question.   

Lawyers can sometimes present as insensitive, hiding the fact that they have a personal, moral or spiritual viewpoint because it does not fall within the parameters of their retainer agreement with their clients. Paid by their clients to provide legal advice, lawyers are not expected to opine on the moral dilemma presented by an unexpected windfall.  Will challenges are concerned with ascertaining the true intentions of the testator, not with determining whether those intentions were motivated by bitterness or spite.  

In concluding his response to the question posed, Gallinger made the comment: "sometimes it's better to be generous than right." Enough said.

Have a great weekend,

David

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The oft-repeated phrase "unprecedented transfer of wealth" has been invoked by estate planners and financial advisors alike to describe the pending inheritance by the children of baby-boomers.  But what if they don't inherit that wealth?  Several months back, Warren Buffett raised more than a few eyebrows when he very publicly announced a commitment to benefit the Bill & Melinda Gates Foundation, rather than his children, with the bulk of his estate.  And he is not alone.

Enter "The Trust Fund Whisperer" as Dr. Lee Hausner was described in a recent article in The Globe and Mail (October 16, 2007),  Dr Hausner is a psychologist who, as Siri Agrell so succinctly put it in her article, "is paid to tell families how to avoid screwing up their children with their cash." A lot of cash, that is, if the title of her book Children of Paradise: Successful Parenting for Prosperous Families is anything to go by.  Essentially, Hausner challenges what she sees as a culture of entitlement enjoyed by the wealthy elite by arguing in favour of fostering a strong work ethic. Agrell's article provides a well organized summary of Hauser's approach together with some of her key recommendations such as: (i) paying for expenses rather than transferring substantial wealth to a child during their career building years and (ii) when transferring cash, spreading the payments in three installments over a prolonged period rather than in one lump sum.   

Certainly, trust and estate practitioners play a key role in implementing such recommendations.  The increasing popularity of such estate planning techniques as incentive trusts (detailed in a transcribed podcast and an audio podcast on our website) can be seen as a response to the thesis espoused by Hauser and others. 

Thanks for reading,

David

• Email This
• Print
• Comments
• Trackbacks
• Share Link

When I recently had occasion to consider the issue of powers of appointment for a presentation, it dawned on me that I may have bit off more than I could chew.  Although intuitively simple, my foray into the subject revealed layers of complexity and confusing overlays of obligations, duties, and powers.  Concepts which appeared straightforward enough, such as "fiduciary duties", gave way to new terms such as "quasi-fiduciary" or "semi-fiduciary."  Of course, nomenclature need not complicate an introduction to new concepts, but it often does.   

In the English estates bar, much has been written of the role of the Protector as a non-trustee recepient of a power of appointment. A recent article in the Trusts Quarterly Review by Anton Duckworth provides a practical approach to resolving the confusion which often may arise in the consideration of powers of Protectors or other non-trustees appointed under a trust. 

Duckworth points out that the role of the Protector has given rise to confusion due, in no small part, to the development of offshore trusts and the advent of the Protector as an alternative to the appointment of multiple trustees. He also points out that Trusts texts had, until recently, historically given scant attention to the issue of non-trustee powers.  Certainly, in Ontario, a settlor may make a Power of Appointment to delegate decision making authority to someone other than the trustee.  What matters is the effect of the settlor's intention.  Because powers may be given to non-trustees for a variety of purposes, Duckworth astutely notes that "this makes life difficult for those who like short answers and standard documents." 

Have a great day,

David  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Support claims under Part V of the Succession Law Reform Act are usually the first choice of Ontario counsel when claiming against an estate on behalf of a disappointed common-law spouse.  But what if the prospective claimant does not meet the requirement of having cohabited with the deceased for at least three years? Other remedies are available but not always easy to obtain.  Belvedere v. Brittain Estate, [2007] O.J. No. 3067, while under appeal, demonstrates a circumstance in which the Court was prepared to make a finding of a constructive trust in unusual circumstances.  In this case, the Court imposed a constructive trust upon an RRSP for the benefit of the deceased's girlfriend ("the Plaintiff").   The Court applied the three criteria that it found necessary to create a constructive trust as follows:

1. Enrichment of the deceased -- the Plaintiff, as an employee of an airline, conferred benefits on the deceased in the manner of housekeeping, care of his child, sharing of her group health benefits and discounted airfares;

2.Corresponding Deprivation -- the Plaintiff was urged by the deceased to sell her car, home and furniture and forego career advancement in entering into a relationship with him.  The Court also considered her emotional devastation at his untimely death as a component of her deprivation;

3. Absence of Juristic Reason --the Defendant estate could not establish any juristic reason for the deceased's enrichment. 

Interestingly, the fact that the Plaintiff had not contributed towards the RRSP was apparently no deterrent to the Court in finding a constructive trust.  The Court considered the consistent evidence that the deceased intended to look after the Plaintiff and the fact that, but for his death, the Plaintiff would have expected to marry the deceased two months later, in which case the marriage would have revoked the Will.

Until tomorrow, David

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Court Approval

In this week's episode of Hull on Estates, Ian Hull and Suzana Popovic-Montag discuss court approvals. They talk about the court approval application process and the global impact of court approvals in every area of law.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Beneficiary Designations

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss core issues in estate planning; specifically the importance of beneficiary designations.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In a previous blog, I made note of the dispute between the Beaverbrook Foundation ("the Foundation") and the Beaverbrook Art Gallery ("the Art Gallery") located in Fredricton, New Brunswick.  At issue was whether a very valuable collection of artwork was gifted or loaned to the Art Gallery by the late Lord Beaverbrook.  When that blog was posted on March 1, 2007, the decision of the arbitrator, retired Supreme Court Justice Peter Cory, was pending.  The decision was released not long after that blog was posted in favour of the Art Gallery; i.e. the artwork had been gifted, not loaned.  Now, the Honourable Mr. Cory has released his decision respecting costs of the arbitration.  On October 6, 2007, it was reported in the media that the Arbitrator decided that costs of some $4.8 million were to be paid by the Foundation to the Art Gallery, a record for a costs awards in New Brunswick (interestingly, both parties are represented by Toronto counsel).  The Foundation has appealed to a three judge panel in New Brunswick. 

This decision highlights the benefits of making offers to settle in the context of any legal dispute.  Evidently, the Honourable Mr. Cory was persuaded that a previous offer to settle that had been made by the Art Gallery, but not accepted by the Foundation, would have saved considerable expense.

It is always difficult to make an offer to settle when the objective in any litigated dispute is total victory.  Offers to settle are a necessary result of the risk assessment process in which counsel and their clients must engage in the course of litigation. Clearly, offers to settle should not be made unless the party making the offer is prepared to have it accepted.  While clients may be prepared to follow the advice of counsel with respect to all other aspects of litigation, the offer to settle is often a decision that the client will adopt as his or her own regardless of the recommendation of counsel. For example, there may often be a reluctance to be the first party to make an offer to settle, or there may be an insistence to include non-monetary terms in any offer to settle.   For a more detailed discussion of costs in estate litigation see this blog posting on our website.

Have a great day,

David

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In Ontario, a lapsed residuary gift is distributed on intestacy, unless there is a contrary intention in the Will.  In Mladen Estate v. McGuire the issue that arose was whether the judge could consider all of the surrounding circumstances or was limited to interpreting the language in the Will when determining whether a contrary intention existed. 

In this case, the Deceased left the residue of her estate to her mother and if her mother pre-deceased her to her aunt and her two cousins.  Both the mother and the aunt pre-deceased her, meaning that the two cousins received their shares of the residue but that the aunt’s share was presumed to pass on intestacy. 

The intestate heirs were determined to be the two cousins named in the will and three other cousins, none of whom the Deceased knew. 

Counsel for the two cousins named in the Will argued that the Deceased would have never intended any part of her estate to go to relatives she did not know and that the lapsed gift should go to the two other residual beneficiaries.  Counsel for the other three cousins argued that the law was clear and that they were entitled to part of the lapsed residue.

The court held that in determining whether a contrary intention exists, the judge is entitled to sit in the “testator’s armchair” and consider the surrounding circumstances when the Will was drafted.  Here, the court determined that a “contrary intention” existed based on the evidence that the Deceased considered the cousins named in her will to be her only cousins and, as a result, they received the aunt’s residuary share.

Have a great weekend!

Megan F. Connolly  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The recent decision in Szarek v. Szarek involved a dispute between two brothers who were the residual beneficiaries to their other brother’s estate. One brother was also the estate trustee. 

The deceased brother owned shares with a date of death value of $58,076.  The estate trustee transferred the shares to his personal trading account in October 2001, at which point they were worth $34,140.  The estate trustee never paid for the shares. 

The estate trustee then sold the shares in November 2006 for $129,000 and, after paying the associated capital gains tax, was left with $112,687.  A dispute arose over who owned the shares.

The estate trustee took the position that he acquired them when he transferred them into his personal account and that he had always intended to pay for them but had not because of pending litigation.  The estate trustee was agreeable to paying the other residual beneficiary half the proceeds, however wanted to rely on their value in October 2001. 

The residual beneficiary’s view was that the shares remained an estate asset until they were sold in November 2006. 

The court sided with the residual beneficiary and found two main flaws in the estate trustee’s position: (1) he never paid for the shares; and (2) it was a self-dealing transaction, meaning he either required court approval or the consent of the beneficiaries - he had neither.  The court found the shares were held in trust for the estate until they were sold and the estate was entitled to the full amount, less the tax that had been paid.

Have a great day!

Megan F. Connolly

• Email This
• Print
• Comments
• Trackbacks
• Share Link

When philanthropically-minded people leave money to a foundation, they might assume that money will be given to the causes they intended.  However, this is not necessarily the case. 

In her article, “Donors Gone, Trusts Veer from Their Wishes”, published in the September 29, 2007 edition of the New York Times, Stephanie Strom discusses the problem of “orphan trusts” in the United States. 

“Orphan trusts” are trusts that were once held locally but later ended up in the hands of lawyers or large banks or trust companies.  As a result, the grants made by the trustees often stray measurably from what the donor had likely intended. 

The NYTimes’ examination of orphan trusts found four major trends:

1. When large banks take over as the trustees, the number of grants given decrease, which has the effect of reducing the bank’s administrative costs while the bank fees, which are based on the value of the assets of the trust, increase;
2. Smaller grant recipients are often dropped for larger and more prominent causes or receive fewer grants;
3. New grant recipients sometimes include the alma maters of the trustees or other organizations with which they have a personal relationship; and
4. Regulators in the United States have limited ability to identify and monitor orphan trusts.

It isn’t clear how many “orphan trusts” exist; however, at least 3,995 foundations reported having a financial institutions as their sole trustee.  Those foundations held more than $5.4 billion dollars in assets and donated $256.1 million in 2005.    

Have a great day!

Megan F. Connolly

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On October 5, 2007, Hull & Hull hosted another of its breakfast series events. As always seems to be the case, it was very well attended and the papers presented were very interesting.

Suzana Popovic-Montag chaired the event. Ian Hull discussed issues relating to settlements when minors or incapable persons are involved, David Smith presented his paper on secret trusts and powers of appointment, and Paul Trudelle reviewed the principles of the mutual wills doctrine and discussed some of the related case law.

After the presentations had been completed, Jordan Atin joined the panel to answer questions from the audience.

As with the other breakfast series presentations, the papers that were presented will be posted on our website soon. In the meantime, if you would like to find any papers that were presented at a previous session, or you would like to purchase an audio version of one of the sessions, you can do so here.

Details about our next breakfast series event will be forthcoming soon. If you haven't had a chance to join us before, I would definitely recommend it. The presentations are usually finished by 9:30 and are followed by a question and answer period for those who wish to stay. If you can't join us in person, you can instead join us by phone or through the web.

I hope to see you all next time!

Have a great day!

Megan F. Connolly

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to "Multiple Wills"

This week on Hull on Estate and Succession Planning, Ian and Suzana continue their discussion about tax plan wills and issues surrounding multiple wills.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to "Estate Planning Tips"

In this week's episode of Hull on Estates, Natalia Angelini and Jordan Atin discuss how to deal with assets in the family and how to avoid future conflict.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

There are a variety of reasons for the removal and replacement of a trustee, some voluntary on the part of the departing trustee, others involuntary. A trustee might decide to retire or resign from his or her position. On the other hand, a trustee may need to be changed as a result of, amongst other reasons, the trustee’s death, incapacity, bankruptcy, the conduct of the trustee or the relationship of the trustee and the beneficiaries of the trust. Depending on the circumstances, the removal and replacement of the trustee may be done by way of deed or by way of court order.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Today’s blog is a reminder that Hull and Hull LLP has another of its Breakfast Series on October 5, 2007. The Breakfast Series provides members of the bar with presentations on topics of importance to estate practitioners.

At the October 5th meeting, the following presentations will be made: “Settlements When Dealing with Minors and Incapable Beneficiaries” by Ian M. Hull, “Secret Trusts and Powers of Appointment” by David M. Smith and “Mutual Wills – A Review” by Paul E. Trudelle.

The meeting is being held at the Ontario Bar Association, 2nd Floor, 20 Toronto Street, Salon 2 & 3, Toronto, Ontario. Breakfast begins at 8:15 a.m. with the Presentations starting at 8:30 a.m. A fee of $30.00 ($28.30 + $1.70 GST) is payable to Hull & Hull LLP upon registration by cheque, VISA or MasterCard. Materials are included. As with the two other Breakfast Series meetings that were offered earlier in 2007, this seminar will be offered via Webcast.

A CD or Cassette Tape recording of the Breakfast Seminar will be available at a fee of $20.00 ($18.96 + $1.14 GST)

To register, please contact Diane Labao at (416) 369-1140 (press 0) or by email to dlabao@hullandhull.com.

See you there.

Craig